CQ WEEKLY – IN FOCUS Nov. 17, 2012 – 3:02 p.m.

All Eyes on OIRA for Hints About Second Term

By Geof Koss and Lauren Gardner, CQ Staff

Having survived an avalanche of campaign ads accusing him of destroying jobs by over-regulating this or that industry — his supposed “War on Coal” comes to mind — President Barack Obama now faces the challenge of deciding how aggressively to pursue his regulatory agenda.

BACK TO SCHOOL: Sunstein, the most recent OIRA administrator, has returned to teaching at Harvard. (SCOTT J. FERRELL/CQ ROLL CALL FILE PHOTO)

For the past two years, Republicans have tried to rescind environmental and health care regulations that, they say, hurt the economy; they have mostly fallen short in the effort. At the same time, environmentalists and consumer advocates have chafed at what they view as the administration’s tendency to soften or delay new regulations.

Both sides are watching to see whether the re-elected president will take off after polluters with tougher regulations on power plants, on oil and gas producers and on refineries, or will steer a more cautious, middle-of-the-road course out of concern that such regulations would weaken the economic benefits of the recent boom in domestic oil and gas production.

An early clue will come when the president selects a new “regulatory czar,” the head of the White House Office of Information and Regulatory Affairs, or OIRA. The agency, tucked away in the Office of Management and Budget across Pennsylvania Avenue from the White House, has for two decades been the final arbiter of regulations from most federal agencies, with the power to send them back for changes.

The intense focus on regulations during the past four years means that there will be even more scrutiny than usual when the president chooses someone to replace Cass Sunstein, who served as OIRA administrator for most of Obama’s first term and left in August to return to Harvard Law School.

Susan Dudley, a pro-business OIRA administrator who served during the last two years of President George W. Bush’s administration, says Obama set the bar high by picking Sunstein, whose sometimes controversial perspectives don’t fit neatly at either end of the political spectrum.

“It would be hard to find someone of that caliber,” says Dudley, who now directs the Regulatory Studies Program at George Washington University.

Mixed Views on Costs and Benefits

But liberal advocates of a strong federal regulatory approach are already working to ensure that the next OIRA administrator is someone far from the mold of Sunstein, whom they soundly opposed when Obama nominated him in 2009.

Their opposition stemmed from Sunstein’s support for balancing costs against benefits in analyzing new regulations. Industry has long supported the practice, which assigns monetary value to the benefits of a proposed policy. But public interest groups and liberal academics say that cost-benefit analysis is the wrong measure for health and environmental rules.

Cost-benefit analysis became popular, and controversial, at OIRA during the tenures of Bush and OIRA administrator John Graham, who headed the office from 2001 to 2006. Graham opposed what he considered needless and needlessly expensive government regulation.

In one high-profile case, the Bush administration faced an outcry for calculating the benefits of air-pollution rules using a formula that discounted the value of a human life after age 70. The EPA later abandoned the policy, which environmentalists had labeled the “senior death discount.”

All Eyes on OIRA for Hints About Second Term

Sunstein had, during his career, questioned some aspects of cost-benefit analysis, but consumer advocates found in his extensive writings enough support for the practice to oppose his nomination to OIRA. Nevertheless, he won Senate confirmation 57-40 in September 2009.

Critics say their fears that Sunstein would be too willing to bend to industry’s wishes were confirmed in 2011, when Obama — after months of intense pressure from business interests — announced that he would delay updating an ozone emissions standard that had been stalled at OIRA for months.

And consumer advocates saw political motives at work as multiple high-profile rules began to stack up at OIRA in the months before the November elections, when ads criticizing administration regulations began appearing in swing states.

Jay Timmons, the president and CEO of the National Association of Manufacturers, says improved dialogue between industry and the executive branch makes regulators more mindful of the economic costs of rules — a concept that, Timmons says, Sunstein understood before he left OIRA and one that Timmons hopes will be understood during Obama’s second term, as well

“We’re hopeful that EPA in particular will have a new approach,” he says.

But Obama is already under pressure to install someone with a background in environmental and health protection.

“The appointee should recognize that the benefits of protecting the public go beyond those that can be simply put in a dollar figure,” wrote Rena Steinzor, a University of Maryland law professor who heads the liberal Center for Progressive Reform, on the morning after Obama’s victory. “If the appointee is someone who sees his or her job as tamping down regulatory agencies’ determination to protect health, safety and the environment when doing so would inconvenience powerful political interests, we will be heading down the wrong road.”

But citing Sunstein’s delay of the ozone rule, former administrator Graham predicts that Obama will select someone who understands the impact of regulations, especially in a sluggish economy.

“If the nominee does not see this priority in regulatory policy, then I would expect the nominee to have a difficult confirmation process in the Senate,” Graham, now the dean of the Indiana University School of Public and Environmental Affairs, wrote in an email.

Confirmation Battles

Despite the relative obscurity of the OIRA administrator’s post, Senate confirmation has steadily become more difficult in recent years. Graham was fiercely criticized by liberals as an enemy of environmental regulation during floor debate before winning confirmation on a 61-37 vote.

Right now, it’s difficult to know who is being considering to lead OIRA, and the administration isn’t saying.

Because OIRA functions largely out of public sight — yet is constantly in the middle of political fights — it is unique, Dudley says, in that it lacks a “real constituency” pushing to see an administrator confirmed.

All Eyes on OIRA for Hints About Second Term

“There’s no one who really thinks the world will come to an end without an OIRA administrator,” she says. “It just isn’t one of those jobs that reaches people’s radar until somebody is nominated; then there’s a small but very vocal group that, as soon as someone is nominated, they will be vilified.”

Dudley understands the politics surrounding OIRA only too well.

First nominated to head the office by Bush in 2006, her nomination languished after critics dispatched to Capitol Hill a highly critical 68-page report describing her tenure at the anti-regulatory Mercatus Center think tank at George Mason University in Northern Virginia.

Although the Senate Governmental Affairs and Homeland Security Committee held a confirmation hearing, it did not schedule a vote on her nomination before the end of the 109th Congress, in 2006. Bush re-nominated Dudley in 2007, but with Democrats newly in control of the Senate, the odds of confirmation were even slimmer. Bush then appointed her to serve as a senior adviser at OIRA before using a recess appointment in April 2007 to install her as administrator.

The move rankled critics and Democratic lawmakers but allowed Dudley to lead OIRA until the end of the Bush presidency.

Should Obama’s nominee get held up by the Senate, the current acting administrator, Boris Bershteyn, could remain in the job indefinitely. (There is a 210-day time limit, imposed by the Vacancies Act of 1998, on temporary appointments to positions requiring Senate confirmation, but the clock is suspended while nominations are pending.)

There is precedent for such a move. A career government employee, James B. MacRae Jr., led OIRA from 1989 through 1992 during the presidency of George Bush because his nominee stalled amid arguments with Congress.

And as a political official Bershteyn — who previously served as OMB general counsel and was appointed in 2011 by Obama to the Administrative Conference of the United States — has “more credibility with the White House than a career person who is acting in that position,” says Dudley.

The focus on avoiding the automatic across-the-board spending cuts and tax increases set to kick in at the end of the year might delay an OIRA nomination. But with the election over, the office will be closely watched for signs that various regulations — which, critics contend, were delayed for political reasons — will begin moving again.

“If it was just really being held up for the election, then you should see the spigot open a little bit,” says one longtime observer of the agency. “And if it was being held up because philosophically they don’t want to see these things, then you won’t.”